Let us briefly review some of the more notorious behavior of the federal government in recent years that has spawned the current economic crisis. First, every law and government agency having anything to do with housing policy, from HUD to the Fed, FDIC, Comptroller of the Currrency, Office of Thrift Supervision, enforcers of equal-lending laws, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Congress, and more, did everything possible to force or bribe mortgage lenders into making trillions of dollars of bad loans to unqualified "subprime" borrowers. Among the various rationales that were given for this monumentally stupid policy were "discrimination," which the Fed admitted there was no evidence of when confronted by Forbes journalists Peter Brimelow and Leslie Spencer in the 1990s. Banks and mortgage lenders made trillions of dollars of bad loans as the Fed assured them that the risk could be swept away when Fannie and Freddie "securitized" the loans and sold them. And there was always an implicit (wink, wink) promise of a bailout if worse came to worse (as it did).
HUD announced in the early 1990s that its top policy priority was to sharply increase the percentage of Americans who owned their own homes, whether they could afford to own a home or not. The home building and mortgage finance industries applauded and supported this brand of egalitarianism run amok. The real culprit, however, was the Greenspan Fed, which flooded the markets with cheap credit, creating the housing market bubble which of course has now burst. Has anyone seen or heard from Alan Greenspan in the past eighteen months, by the way?
~ Thomas J. DiLorenzo, "Why Did This Happen?," LewRockwell.com, February 5, 2009